Question

Check my we Required information The Foundational 15 (L01-1, L01-2, L01-3, LO1-4, L01-5, LO1-6) The following information applies to thections displayed below.) Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost Per Unit $5.50 $3.00 $1.50 $4.00 $ 2.50 $2.00 $1.00 $0.50 Foundational 1-11 11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places and other answers to the nearest whole dollar amount.) Total manufacturing overhead cost Manufacturing overhead per unit

Answer 1

Variable cost changes with the change in level of production while total fixed costs remain the same within the relevant range

Hence, Total manufacturing overhead cost at 8000 units = 1.50*8000 + 4*10,000

= $52,000

Per unit = 52000/8000

= $6.5 per unit